Stock Futures Pare Gains After Jobless Claims Data
January 21 2021 - 9:42AM
Dow Jones News
By Caitlin Ostroff
U.S. stock futures wobbled after jobless claims data remained
high, indicating the labor market was struggling to recover amid
the coronavirus pandemic.
Futures tied to the tech-heavy Nasdaq-100 led markets, rising
0.2%, indicating the index may climb further after notching its
third record high this year on Wednesday. Contracts tied to the
broader S&P 500 and those linked to the Dow Jones Industrial
Average were flat.
Fresh data showed that 900,000 Americans filed first-time claims
for unemployment benefits for the week ended Jan. 16, as companies
continued to lay off workers amid a surge in Covid-19 cases. The
U.S. reported 4,200 deaths for Wednesday, the second-highest daily
number ever.
Investors are also watching earnings closely to see if they
support the strong run across markets in recent months. Many have
bet on an economic recovery this year as Covid-19 vaccinations ramp
up, increasing prospects for future earnings.
Shares of Travelers, a major property-casualty insurer, climbed
2.2% in premarket trade after it logged an increase in quarterly
profit and a modest rise in net written premiums. Regional bank
KeyCorp rose 1.4% after it recorded higher revenue and a larger
profit, with increased activity in its consumer-mortgage and
investment-banking businesses driving fees. Meanwhile, Ford Motor
climbed 3.3% premarket.
Chip giant Intel and International Business Machines are slated
to announce results after markets close.
"Earnings season looks relatively good and seems to confirm this
picture that the U.S. -- because there was no full lockdown -- did
well in the fourth quarter," said Carsten Brzeski, ING Groep's
global head of macro research. "Stock markets are really looking
through the short-term outlook for the economy, which has worsened
over recent days."
Investors are paying close attention to corporate guidance in
the sectors most affected by the pandemic. In offhours trading,
shares of United Airlines fell 2% after the airliner said it
expected the coronavirus to continue to weigh on travel demand this
year.
Supporting markets is the expectation that central banks and
governments will step in if financial conditions deteriorate. This
has encouraged investors to seek out higher returns, including in
overseas markets.
Japan's Nikkei 225 Index rose 0.8% Thursday and is trading near
its highest level in 30 years. India's benchmark stock gauge, the
S&P BSE Sensex Index, hit a record high Wednesday. Indexes in
China and South Korea rallied, with the Shanghai Composite up 1.1%
and Korea's Kospi gaining 1.5%.
The backstop from governments and central banks -- plus
consensus among investors for a strong economic recovery this year
-- has squeezed volatility out of the market. The Cboe Volatility
Index, known as the VIX and seen as Wall Street's fear gauge, was
at 21.45 Thursday, its lowest since December.
A day after President Biden was inaugurated, money managers are
keeping a close eye on his proposed Covid relief package, and the
prospects for it proceeding through Congress.
While stocks have taken their cue from the stimulus plans,
investors in bonds have been more skeptical of a big spending push,
keeping yields relatively subdued, said Daniel Morris, BNP Paribas
Asset Management's chief market strategist.
The yield on the benchmark 10-year Treasury note ticked up to
1.118% Thursday, from 1.089% Wednesday. Yields rise when bond
prices fall.
"At least one part of the market is saying 'nice idea,' but if
you really thought you'd get $1.9 trillion in stimulus, yields
would be higher," said Mr. Morris.
Overseas, the pan-continental Stoxx Europe 600 rose 0.3%. The
materials and information technology sectors led gains, while
industrials and energy sectors lost ground.
Meanwhile, the European Central Bank held steady on interest
rates.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
January 21, 2021 09:27 ET (14:27 GMT)
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